E-comm wars: How Flipkart is making deep inroads into Amazon’s territory

The year 2020 brought about severe disruptions as well as crucial changes in several sectors. Amid the pandemic conditions, sectors such as E-commerce, OTT and gaming saw hitherto unseen growth trajectories. Along with this, mobility and food aggregators, too, received a major push.

As consumer behaviour went through a paradigm shift, KalaGato, an automated audience profiling, segmentation and targeting platform that helps brands reach their customers, decodes how e-commerce majors Amazon and Flipkart battled it out last year.

According to the KalaGato report, Amazon started 2020 with a substantial lead on penetration, however, Flipkart closed in by December. Both players grew reach, as more consumers shifted online during the lockdowns, however, Flipkart’s 20% growth left Amazon’s 5% growth (although on a much larger base) looking low.

While e-commerce penetration increased across the board, the highest growth was seen among the older customers, mostly in the 45+ age group, and the 35-45 age group to a lesser extent, the Kalagato report said.

Despite the growth seen in the last year, the e-commerce sector still remains the most under-penetrated segment, as KalaGato points out – 38% reach for 45 Y.O. vis-a-vis overall penetration of 46% for Flipkart, and 61% reach for 45 Y.O. as against overall penetration of 65% for Amazon. Thus, there much more scope for growth that the likes of Amazon and Flipkart can unlock.

Barring the initial phase of delivery embargos, and the hike in usage during the festive period, the year saw a more or less consistent usage pattern.

The KalaGato report further states that even though Flipkart’s usage metrics are significantly better, Amazon’s larger base, in effect, allows for similar absolute numbers of active users on both platforms. In order to build on their growth, KalaGato observes that Flipkart would need to work on greater reach and desirability, while Amazon needs to move its inactive base into transacting customers.

The report reveals, “Amazon grew transacting reach by 1.5x, while Flipkart doubled. Flipkart has much reason to cheer when it comes to transacting/ paying customers – not only did they start 2020 on a stronger footing than Amazon, the platform has clearly come out on top through the pandemic as well.”

Female buyers, Tier 3 towns and older customers led the growth in e-commerce sector, which saw high growth in 2020.

According to KalaGato, Higher Open Rates and Time spent for Flipkart could indicate one of two things – more engaged users or a higher ‘dwell’ time – this was evident during the festive period. A potential reason for higher engagement or dwell times (depending on one looks at it) is ‘deal hunting’ and ‘deal availability’. “Does the Flipkart audience consist of more deal hunters as compared to Amazon? If this is the case, are they as loyal?,” asks KalaGato.

Looking at the Average Order Values and Average Order Frequencies (calculated per transacting customer), the report states that Amazon users often order worth lower values, but order more frequently, indicating a greater level of platform loyalty.

It further adds that Flipkart also leads in average transaction value per customer at 12% higher order values on average than Amazon, and a whopping ~30% lead during the Festive period (October 2020).

“On average, an Amazon customer orders ~30% more frequently than a Flipkart customer,” the KalaGato report states, adding that this could have to do with a holistic loyalty programme that bundles several offerings (especially around content), with the promise of faster delivery, discounts and now even food. Amazon Pay is part of a larger strategy of providing users with “everything”, in a bid to enmesh the user within the ‘Amazon eco-system’.

According to KalaGato, while Amazon’s penetration and platform loyalty (when it comes to order frequencies) are its distinct advantages, Flipkart’s user engagement and order values give it an edge.

Entering into this mix are Ajio and JioMart from Reliance Industries, as well as the Tata Group by way of TataCliq and their investment into 1MG and BigBasket. Backed by cash rich conglomerates, these companies will be able to offer discounts/ deals that make profitability and retention more competitive than it already was, KalaGato concludes.

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